In e-commerce, customers purchase merchandise by accessing a website, selecting one or more items, entering payment information, and indicating a preferred delivery date. In most cases, from the customer standpoint, the merchandise later “magically” appears on their doorstep at or before the delivery date. This easy and convenient form of shopping has spawned an online retailing industry that is growing rapidly each year.
The behind-the-scenes processes that fulfill online purchase orders and ensure timely and efficient delivery of merchandise to customers are not, however, magic. Indeed, the fulfillment processes are quite complex. Generally, the fulfillment processes can rely on a fulfillment network that includes geographically dispersed fulfillment centers for handling orders. Consider the task of fulfilling a typical common purchase order for diverse items, such as a book, a toy, a DVD, and a digital camera. Suppose further that the customer lives in California, but the e-commerce company has fulfillment centers in other parts of the country. Determining which center or centers should handle all or parts of the task is a difficult problem. Moreover, the solution to this problem has important cost-related implications, as choosing a non-optimal fulfillment center can result in higher operating costs. Accordingly, there is a need to effectively manage selection of fulfillment resources to fulfill purchase orders for merchandise that is ordered online.